Home prices in the United States surged in October, underpinning the boom in the property market even after last year’s coronavirus recession.
The S&P CoreLogic Case-Shiller 20-city home price index report, released on Tuesday, showed that home prices went up to 18.4% in October from a year ago. National home prices marked an increase of 19.1% in October year-over-year but came slightly less than the revised 19.7% annual increase in September. Notably, consecutively in the second month, a slowdown in growth has been registered.
All 20 cities included in the index posted double-digit gains in the year ended in October. Phoenix, Tampa and Miami were the hottest markets, recording the highest year-over-year increase of 32.3%, 28.1% and 25.7% each. Minneapolis and Chicago saw the shortest gains with 11.5% each.
All thanks to rock-bottom mortgage rates that the housing market grip remained strong during the year hit by the pandemic. The scarcity of available property on the market combined with pent-up demand from consumers locked in last year by the pandemic played a significant role.
S&P CoreLogic Case-Shiller 20-city home price index report suggests that many Americans, tired of being locked at homes during the pandemic, tried to upgrade from apartments to homes or bigger houses.
According to Craig Lazzara, managing director at S&P Dow Jones Indices, it is difficult to judge whether this shift is permanent or an aberration.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by a change in locational preferences as households react to the COVID pandemic,” Lazzara said.
“More data will be required to understand whether this demand surge represents an acceleration of purchases that would have occurred over the next several years, or reflects a more permanent secular change.”
Last week, mortgage rates declined to 3.05% for the benchmark 30-year fixed-rate and 2.66% for the 15-year fixed-rate home loan. The continuous fall in mortgage rate indicates a sense of disquiet in the credit market about the rampant spread of the Omicron variant and its impact on economic growth than about the highest inflation rates in nearly four decades.